What is Defalcation?
Answer:
The term defalcation has multiple meanings.


It is often used to express that the misappropriation or embezzlement of money has occurred. It implies that the funds have been mishandled, especially when an agent or officer has breached his fiduciary duty.

Defalcation is commonly used in the title insurance industry where funds that have been placed in escrow to close an insurance transaction have been misused by a title agent.

Defalcation often applies to public officers as well as to corporate officers who misappropriate public or company money for their own personal interest.

When funds are placed in someone else’s care and that person misuses them for a purpose other than what they were intended for, a defalcation has occurred. For example, if you place funds into escrow as part of a real estate transaction, and the funds are not used to fund the loan as per the escrow instructions, a defalcation has occurred.

Defalcation also refers to a set of bad acts that taint debt to the point that it the debt cannot be discharged in bankruptcy court.
  more Q&A sessions like this

Trackback(0)
Comments (0)add comment

Write comment
You must be logged in to post a comment. Join for free or Login.

busy